April 18, 2019 / 10:22 AM / 6 months ago

BUZZ-Canadian base metal miners: NBC expects zinc cos to be conservative on estimates

** National Bank of Canada raises 2019 price assumption on copper by 6% to $2.91, nickel by 14% to $5.83, zinc by 15% to $1.32, molybdenum by 8% to $12.19

** Brokerage expects zinc companies to generally build in some form of conservatism into their estimates and avoid any material guidance revisions early in the year as zinc cost rises are likely

** Accounts for elevated treatment charges for zinc to have most material impact on Trevali Mining Corp, modest cost rise for Lundin Mining Corp and Capstone Mining Corp

** Brokerage stays overweight on Lundin; raises PT to C$11 from $9.25; says $800 mln acquisition of the Chapada mine from Yamana Gold Inc removing what many believed to be a large overhang on the shares

** Says Nexa Resources is the only company expected to gain from elevated zinc treatment charges as the company remains a net refiner of zinc; Any increases to benchmark zinc treatment and refining costs are expected to benefit Nexa’s bottom line; Raises PT by 16% to C$22

** Stays underweight on First Quantum as brokerage accounts for lower production due to the Zambian rainy season in Q1 and model a 10% rise to Zambian operating costs; raises PT to 7.7% to C$17.50

** Also underweight on Hudbay Minerals Inc on higher costs in H1 in Manitoba and potential for shipments to be held back due to reduced availability of railcars in Manitoba

** Other PT raises: Capstone Mining Corp to C$0.90 from C$0.80; Ero Copper Corp to C$18 from C$17.50; Teck Resources to C$38.50 from C$36; Trevali Mining to C$0.80 from C$0.50

** The S&P TSX Metals & Mining Index has risen ~7% so far this year (Reporting by Arathy S Nair)

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